What does an earnest money deposit signify in a property transaction?

An earnest money deposit signifies a buyer's serious intent to make an offer on a property. This deposit typically accompanies the purchase agreement to show the seller that the buyer is genuinely interested in completing the transaction. The amount of the earnest money can vary, but it serves as a financial commitment that reinforces the buyer's offer and indicates a willingness to proceed with the sale. If the transaction goes through, this deposit is often applied to the down payment or closing costs. If the deal falls through due to the buyer's fault, the seller may be entitled to keep the earnest money as compensation for the time the property was taken off the market.

While the other choices present different aspects of real estate negotiations, they do not accurately reflect the primary purpose of an earnest money deposit. The deposit is about demonstrating commitment and intent, rather than negotiating a price, a seller's commitment, or fees associated with property inspections.